Virgin Media 2008 Annual Report Download - page 102

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2—Significant Accounting Policies (Continued)
On March 3, 2006, NTL Holdings Inc. (formerly known as NTL Incorporated and now known as
Virgin Media Holdings Inc, or Virgin Media Holdings), merged with a subsidiary of NTL Incorporated
(formerly known as Telewest Global, Inc., or Telewest, and now known as Virgin Media Inc., or Virgin
Media). The merger has been accounted for as a reverse acquisition in which Virgin Media Holdings is
treated as the accounting acquirer, primarily because Virgin Media Holdings’ shareholders owned 75%
of the common stock upon completion of the merger. Following the merger, Telewest changed its name
to NTL Incorporated, and subsequently to Virgin Media Inc. As a result, the historical financial
statements of Virgin Media Holdings became the historical financial statements of Virgin Media Inc. as
of the completion of the merger.
The results of operations and cash flows for Telewest, the acquired company for accounting
purposes, are included in the consolidated financial statements from March 3, 2006, the date on which
the merger was completed.
The results of operations and cash flows for Virgin Mobile are included in the consolidated
financial statements from July 4, 2006, the date of its acquisition.
Principles of Consolidation
The consolidated financial statements include the accounts for us and our wholly owned
subsidiaries. Intercompany accounts and transactions have been eliminated on consolidation. The
operating results of acquired companies are included in our consolidated statements of operations from
the date of acquisition.
For investments in which we own 20% to 50% of the voting shares and have significant influence
over the operating and financial policies, the equity method of accounting is used. Accordingly, our
share of the earnings and losses of these companies are included in the share of income (losses) in
equity investments in the accompanying consolidated statements of operations. For investments in
which we own less than 20% of the voting shares and do not have significant influence, the cost
method of accounting is used. Under the cost method of accounting, we do not record our share in the
earnings and losses of the companies in which we have an investment and such investments are
generally reflected in the consolidated balance sheet at historical cost.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Such estimates and assumptions impact, among others, the following: the amount
of uncollectible accounts receivable, the amount to be paid to terminate certain agreements included in
restructuring costs, amounts accrued for vacated properties, the amount to be paid for other liabilities,
including contingent liabilities, our pension expense and pension funding requirements, amounts to be
paid under our employee incentive plans, costs for interconnection, the amount of costs to be
capitalized in connection with the construction and installation of our network and facilities, goodwill
and indefinite life assets, long-lived assets, certain other intangible assets and the computation of our
income tax expense and liability. Actual results could differ from those estimates.
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